Islamic economic system

[Secret Service]

If the system is better than the current system, should we not reveal to everybody, so that mankind can benefit from it.
Also, should we not discuss and debate to figure out why and how it is better, so that we can convince everybody to implement it.

it is based upon the principles and laws of Quran and Hadees ...and it was implemented for 30 years during Khilafat .

---------- Post added at 12:55 AM ---------- Previous post was at 12:55 AM ----------

 

[Sinnerman108]

Ask them a simple question and they come up with something theological.

They have no idea of what they're talking about. For example, look at this guy:



He says X, Y and Z will be enough to run the state but how? He won't say.

Moreover, even X, Y and Z are nothing but either taxes or investments like good old FDI i.e. old wine in new bottle.

What's new that they propose? Well, even they don't know that.

May I have an attempt at explaining how the Islamic system differs.

1. The concept and definition of "ownership" is different from that of Capitalism and Communism.
We believe that we have come to this world for a fixed time only, and every thing that we get, we get temporarily and belong to God almighty only.

2. There is no concept of "STOCKING UP".
This means, Islam actually discourages you from saving money.
there is nothing that stops you from making money. Islam encourages trade (business) over salaried employment.
However Islam strictly discourages stopping the flow of wealth.

3. No sin is worse than interest.
It is shameful to even write, how dirty a sin interest is.
Thus no banks.

So, form the modern day system Capitalist / Communist. Take out "interest" compound and simple both.
Take out Banks and the concept of "saving" as per say.

and you will almost have an Islamic system.

 

[tashfain]

desioptimist & JackSparrow

There is a shared book on this thread called as khilafaht funds.It has all the detail about how much amount the system can generate from these resources.I have just shared some of the most important but I myself am reading now that book and tomorrow or day after tomorrow I'll put the whole idea here about the funds.

But the thing is Muslims every concept comes from theology.We live & die with theology.Even if you read the Quran ,you'll understand how important theology is for Muslims.

 

[CaptainJackSparrow]

May I have an attempt at explaining how the Islamic system differs.

1. The concept and definition of "ownership" is different from that of Capitalism and Communism.
We believe that we have come to this world for a fixed time only, and every thing that we get, we get temporarily and belong to God almighty only.

Theology. Let's talk economics, shall we?

2. There is no concept of "STOCKING UP".
This means, Islam actually discourages you from saving money.
there is nothing that stops you from making money. Islam encourages trade (business) over salaried employment.
However Islam strictly discourages stopping the flow of wealth.

Dude, these are very generic things you're saying. You're not helping your cause. Talk about what's NEW in your system. How it achieves what it wants to achieve.

3. No sin is worse than interest.
It is shameful to even write, how dirty a sin interest is.
Thus no banks.

Great! Now we talk of something debatable.

So no banks, huh? Then how do you do what banks do?

How do people deposit their savings and where?

How do people take loans?

Why will anybody give a loan without interest?

What about accounting for inflation in the loan given?

So, form the modern day system Capitalist / Communist. Take out "interest" compound and simple both.
Take out Banks and the concept of "saving" as per say.

and you will almost have an Islamic system.

Oh! so you won't let people save. Then how do they prepare for a rainy day?

And will you force me to give you a loan without interest? Why would I?

 

[Muhammad-Bin-Qasim]

1 Ummah
thanks a lot for sharing such a wonderful book on funds in khilafah state.I'll definitely read it for more in-depth information.

All
Islamic economic system, is not a separate entity from Islam.For a successful Islamic system we have to implement all systems of Islam i.e. Economic system,Judiciary,Foreign Policy,Education system,Social system.
If we will try to implement Islams economic system only and not other systems.we'll fail terribly because in QURAN,ALLAH(SWT) says that, You accept some parts of deen and rejects others.so for such people there is humiliation in this world and punishment here after.so If Islam needs to be implemented,it has to be implemented fully.

Jack,Ashok.
Islamic economic system is different because of the definition between Capitalism and Communism.
Capitalism says that resources are limited so earn as much as you can before it runs out and this led whole basis of Capitalist economics.
Islam says that resources are immense and will not end and ALLAH has taken responsibility to feed every single living creature on this earth.ALLAH will provide the sources and we just have to administer it and for that too ALLAH has given the laws that leads to Islamic economic system.

Also Capitalism and communism has many things from Islam but that doesn't mean that we compare Islam with thee evil ideologies.Communism and Capitalism arose by constant subjugation by church and both are failing or have failed.It is only a matter of time when khilafat will come and world will witness a new economic system free of interest.

I'll answer your questions but you have to think out of the box. Islam can never fit in this Capitalist ideology.Islam is unique and its structure is different than whole world.Our values are different.Our freedoms are different and we don't share any values identical to the world so if you want us to change our religion in a way to suite this 21st century sorry we cant do that.however we can bring khilafat and can show the world that Islam can solve each problem of this human race.

Hey!!! I linked that book... Not 1Ummah...

 

[desioptimist]

desioptimist & JackSparrow

There is a shared book on this thread called as khilafaht funds.It has all the detail about how much amount the system can generate from these resources.I have just shared some of the most important but I myself am reading now that book and tomorrow or day after tomorrow I'll put the whole idea here about the funds.

But the thing is Muslims every concept comes from theology.We live & die with theology.Even if you read the Quran ,you'll understand how important theology is for Muslims.

Brother, if I had enough time to read every book about every theory( right or discredited or lunatic), I wont be arguing here. I would have made up my mind.
Now that you are suggesting the islamic economic system, you are supposed to give an outline of it and also how it solves the problems in the current system without making matter worse.
From what I see, it is not a system, it just prohibits certain activities, while not talking about lots of other activities at all.

 

[desioptimist]

May I have an attempt at explaining how the Islamic system differs.

1. The concept and definition of "ownership" is different from that of Capitalism and Communism.
We believe that we have come to this world for a fixed time only, and every thing that we get, we get temporarily and belong to God almighty only.

2. There is no concept of "STOCKING UP".
This means, Islam actually discourages you from saving money.
there is nothing that stops you from making money. Islam encourages trade (business) over salaried employment.
However Islam strictly discourages stopping the flow of wealth.

3. No sin is worse than interest.
It is shameful to even write, how dirty a sin interest is.
Thus no banks.

So, form the modern day system Capitalist / Communist. Take out "interest" compound and simple both.
Take out Banks and the concept of "saving" as per say.

and you will almost have an Islamic system.

So islamic system will not have saving, will not have banking.
At personal level, without saving, how will you tide over unforeseen bad days, or even big ticket purchase.
Can you purchase land or house or a car, without saving?
How many days of accumulation of wealth is called saving in your system, day, month or year?

Also, please tell how we can live without banks, unless we want to go back in time.

 

[Sinnerman108]

So islamic system will not have saving, will not have banking.
At personal level, without saving, how will you tide over unforeseen bad days, or even big ticket purchase.
Can you purchase land or house or a car, without saving?
How many days of accumulation of wealth is called saving in your system, day, month or year?

Also, please tell how we can live without banks, unless we want to go back in time.

Just because the only system you are aware of is based on modern and fractional lending, doesn't mean another is not possible.

The concept of saving is as follows:
No where does the Islamic system stop you from becoming wealthy.
As a matter of fact it encourages you to trade as much as possible.
However it discourages you from taking more than what you require.
GREED is highly discouraged and followers are told to be contempt as much as possible.

Now as for loans and etc.

In an economic system, where wealth does not stop at certain points, every one gets their share.
So loans etc are not required very much.
Also please understand that Muslims are told to keep what they NEED only and give the rest in charity.

This is over and above the 2.5% of one year's wealth we have to give.

Remember the core concept was that we have come in this world for a small time, so it is our duty to share what we get with others.

 

[Abu Basit]

Thanks, do the jizia payers have to pay other kind of tax on top of jizia or is it a one payment?

NO they don't.

Those who are exempted from paying the Jizya:

Women and children
Day laborers, servants or wageworkers
Religious people who keep themselves free for praying and worshiping (monks, nuns)
Handicapped, blind and old men, even if they are wealthy
If a non-Muslim voluntarily participates in military service for protecting the country
If the Islamic state becomes unable to protect non-Muslims, then they are legally exonerated from paying the tax. (Kitab al-Umm by Imam Shafi)

Non-Muslims will not have to pay the State any jizya if they cannot afford to do, this was the ijtihad made by Khalid ibn Al-Walid with the Christians of Al-Hira in Iraq


Any aged non-Muslim who is unable to earn his livelihood, or is struck by disaster, or who becomes destitute and is helped by the charity of his fellow men will be exempted from the capitation tax and will be supplied with sustenance by the bait al-mal (the government treasury). (Abu Yusuf, Al-Kharaj, p. 144)


A non-Muslim who joins the armed forces of the Islamic state will not have to pay jizya and they even get a share in the war booty. This has been recorded in historical documents as early as the time of Sayyidina Umar and as late as the Ottoman empire when the Christians of Albanian decent guarded the areas of Cithaeron and Geraned on behalf of the military. (Zeidan, 'Abdul Karim, Ahkam-Dhimmiyin Wa Al-Musti'minin Fi Dar Al-Islam; Al-Baladhuri, Futuh Al-Buldan).

In Islamic law if a non-Muslim has paid the jizya it becomes an obligation on the state to protect a non-Muslim at all costs even if it means to sacrifice their life for a non-Muslim.

Imam al-Qarafi (Rahimullah) mentions in his Al Furuq

"Muslims who have entered into a pact of dhimma, should fight until death with those who try to oppress non-Muslims in the Islamic state in order to abide by the guarantee given to them by Almighty Allah and His Messenger, upon whom be peace. Otherwise they will be considered as traitors."

 

[pundit]

If this was a working system and a successful one, it would have survived 14 centuries and remained live in some shape or form. Economic darwinism probably killed it off, even if it did exist at some time.

Reality is cruel.

 

[Chogy]

Jizya...

Why should I be penalized because I don't believe in the Prophet? Is this any different from raw exploitation?

"You are a Muslim. We will provide you security, welfare, you will live in peace and stability."

"But how will you pay for it?"

"We will tax the Jew, the Christian, and the Hindu."


Where is the motivation to take risks in this system? If I cannot save, I cannot become wealthy.

The Pie Analogy...

There is a common misconception about a basic capitalist system, and that is, that an economy is a giant pie, and everyone gets a slice. If my neighbor gets a bigger slice of pie, that implies that someone else suffers with a smaller slice. "NO FAIR! He has MORE than me! Give me some of HIS pie, so we are equal!"

The reality is that venture capitalists, investors, and entrepreneurs do something like this: "Cool! I have a slice of pie. Instead of eating it, I am going to turn it into a BIGGER slice!" So they set up factories, create goods, provide jobs, and their slice grows. So do the slices that all of their workers get. Everyone benefits.

Under capitalism, the overall size of the pie grows larger. Everyone's circumstances are elevated. But a good system needs checks and guards in place to prevent abuses.

Communism on paper is a beautiful thing. Communism in reality absolutely does not work. If I know the State will provide for my every need, why work my rear end off? Why take risks? Why start a company like Microsoft knowing that pretty much everything I make beyond a comfortable living will be taken from me by force?

 

[1 ummah]

Why should I be penalized because I don't believe in the Prophet? Is this any different from raw exploitation?

"You are a Muslim. We will provide you security, welfare, you will live in peace and stability."

"But how will you pay for it?"

"We will tax the Jew, the Christian, and the Hindu."


Where is the motivation to take risks in this system? If I cannot save, I cannot become wealthy.

The Pie Analogy...

There is a common misconception about a basic capitalist system, and that is, that an economy is a giant pie, and everyone gets a slice. If my neighbor gets a bigger slice of pie, that implies that someone else suffers with a smaller slice. "NO FAIR! He has MORE than me! Give me some of HIS pie, so we are equal!"

The reality is that venture capitalists, investors, and entrepreneurs do something like this: "Cool! I have a slice of pie. Instead of eating it, I am going to turn it into a BIGGER slice!" So they set up factories, create goods, provide jobs, and their slice grows. So do the slices that all of their workers get. Everyone benefits.

Under capitalism, the overall size of the pie grows larger. Everyone's circumstances are elevated. But a good system needs checks and guards in place to prevent abuses.

Communism on paper is a beautiful thing. Communism in reality absolutely does not work. If I know the State will provide for my every need, why work my rear end off? Why take risks? Why start a company like Microsoft knowing that pretty much everything I make beyond a comfortable living will be taken from me by force?

who says u cant save?

 

[1 ummah]

Islamic banking: The basics

The main difference according to the industry between a banks' conventional and Islamic products is the absence of interest. Under Shari'ah law interest, whether nominal or excessive, simple or compound, fixed or variable is forbidden. Shari'ah based products also favour asset-based transactions.

Explaining the principles behind it Dr Taha El Tayeb, head of products development and Sharia structuring at Mashreqbank's Islamic banking division Badr Al-Islami says: "Islamic finance and Sharia law would always recommend people to go for asset-based transactions. If you need to buy a car for instance, instead of borrowing money from a bank - that bank should take the risk, buy the car and sell it to you at a profit rate." he also adds: "The intent of Islamic banking is very much that you are in a socially responsible banking community. Islamic banking moves away from pure speculation and more into activities that will help to grow the industry and the infrastructure-based economy. Every transaction is tied to an asset, which is a real world economy asset."

There are three main Islamic financial instruments which are used to structure Islamic loans.

Ijara works as a leasing agreement whereby the bank buys an item - such as a house or a car - for a customer then leases it back to them until they have paid off the full amount and take over ownership of the item. "When a customer is planning to buy something we at Amlak buy that property then we give it to the customer on a lease period of 15 to 20 years then the ownership passes to the client. There is no interest charged but there is profit based on the fact that when you own a property you have the right to rent it out for however much you want." Says Khalid Zainal, Director of Sales and Marketing of Amlak Finance

Murabaha works by the bank supplying specific goods for resale to the customer at a profit rate.

The customer pays the bank back in monthly instalments - the rate of which are fixed. Commodity Murabaha is designed for customers who want a fixed rate cash loan and involves the purchase and sale of commodities on the London Metal Exchange.

The third Islamic banking instrument, Musharaka, which is a joint venture whereby the customer and bank contribute to the funding of a venture and agree to share the returns - as well as the risks - in proportions agreed in advance.

Islamic credit cards look set for major growth with increasing demand from customers prompting banks such as Standard Chartered and First Gulf Bank to launch their own Sharia compliant products. However Islamic credit cards are still to hit the western high street. Islamic credit cards work in much the same way as conventional cards but in place of interest banks will charge customers annual or quarterly fees. Standard Chartered's latest offering, the Saadiq Visa Gold Credit Card, for example operates on the Urjah concept, which is based on a fixed fee structure.

Customers are given a grace period to pay the monthly outstanding balance on the card to avoid paying a fee, and a fixed monthly maintenance fee is charged for usage of the card's service account.

Islamic Economics

The global financial crisis has highlighted some fundamental problems with free market economies. The market as the ideal method to distribute wealth has been discredited, economic growth in free market economies has proven to be unsustainable and the financial markets, for long the showpiece of free market success has proven to be no different to a casino.

In order to stimulate many of the broken economies of the West and overcome many of the structural flaws that cause economic crisis, many free market governments have turned to Islamic finance due to the phenomenal growth it has shown in the last decade. However this deflects attention from the real problems the West faces.

Whilst there is much the West can learn from the Islamic economy - such as the stability Islam brings by being based upon the real economy, the rapid distribution of wealth through a non-interest based economy and the stability Islam's provided by Islam's trade rules and the removal of gambling and speculation. Such economic concepts are in reality a few aspects of the Islamic economy, which itself are built upon a fundamental alternative view towards wealth, production, the macroeconomy and property. The mere adoption of some aspects of Islam will not solve the economic problems of the West and even the Muslim world.

Free market economies need a complete overhaul as no amount of regulation will ever curb the motive to make money at any cost. For this reason boom and bust has been a feature of free market economies for over 200 years and will continue to do so.

Conclusions

The Islamic economic system is an integrated system with different aspects of Islamic economics all feeding into each other. The rules of Riba are built upon Islam's view of wealth, the Islamic rules of trade are built upon Islam's view towards ownership, Islamic taxation is built upon Islam's views towards wealth distribution and Islamic finance is built upon Islam's view towards investment and currency. Taking a part of Islam without its framework will only create contradictions in an economy. Attempts by the West to plug its problems through aspects of Islam are attempts at giving the free market a leg up.

The Ummah should not feel happy when a few elements of Islamic economics are made available. This is an implicit acceptance that Islam can not stand on its own feet. There is a much bigger issue and that is why are the Gulf states and the Far East who are the leaders in Islamic finance not comprehensively implement Islam and make it available in the Muslim world. Such an approach would completely revitalise the economies of the Muslim world and project a positive image of an economic alternative. Islam is a complete system, all of it should be applied.

 

[fida jan]

Why should I be penalized because I don't believe in the Prophet? Is this any different from raw exploitation?

"You are a Muslim. We will provide you security, welfare, you will live in peace and stability."

"But how will you pay for it?"

(sone peh sohaga)"We will tax the Jew, the Christian, and the Hindu."

in islam, the muslims are taxed also, the tax is called zakat, normally the zakat value depends on the wealth a muslim guy has, zakat laws doesnt apply for non muslims, its only for muslims, if you buy more gold, you have to pay zakat according to the property you own, more property more zakatzakat is only for muslims.

as compared to that, a fixed amount of tax was enforced on non muslims called jizya, it had a fixed value s compared to zakat, so if you are poor or rich, u had to just pay a small amount of jizya, which was not on muslims..

so if you are not believing in the prophet you are making a greater profit by remaining in a muslim state..

There are two categories of charities in Islam - obligatory and voluntary
[edit]Obligatory
Zakat on wealth, including savings (traditionally gold and silver), investments, and trading/turnover stock (and cash in hand)
Zakat on livestock which covers camels, cattle and sheep and goats as one category
Zakat on agricultural produce, including grains, pulses, cereals and in some case other produce if they are to be dried or pressed for oil
Zakat on the produce of mines and also buried treasure
and in some cases
The Jizya
[edit]Zakat-al-fitr
Zakat al-fitr is very different to the Islamic pillar of Zakat. It is connected to the pillar of Sawm (fasting in Ramadan) and acts as a purification of the fast itself.
Almsgiving on self, Zakat al-fitr (fast-breaking zakah)
[edit]Voluntary
Donation to build mosques and schools
Helping non-Muslims (those in need of non-Muslim citizens).

http://en.wikipedia.org/wiki/Zakat

jizya was taken for the protection of the non muslims themselves and zakat was only obligatory on muslims, now please read wiki

From the point of view of the Muslim rulers, jizya was a material proof of the non-Muslims' acceptance of subjection to the state and its laws, "just as for the inhabitants it was a concrete continuation of the taxes paid to earlier regimes."[6] In return, non-Muslim citizens were permitted to practice their faith, to enjoy a measure of communal autonomy, to be entitled to Muslim state's protection from outside aggression, to be exempted from military service and the zakat taxes obligatory upon Muslim citizens

http://en.wikipedia.org/wiki/Jizya

by giving zakat, a muslim was always obligatory to render military service is required for the islamic empire, but the non muslim was never obligatory for jizya tax, and in return a non muslim enjoyed security and safety provided by those same zakat paying muslims,

so you evilize muslims, this is the rhetorical answer...

 

[Abu Basit]

This tax was not imposed on the Christians, as some would have us think, as a penalty for their refusal to accept the Muslim faith, but was paid by them in common with the other dhimmis or non-Muslim subjects of the states whose religion precluded them from serving in the army, in return for the protection secured for them by the arms of the Musalmans. When the people of Hirah contributed the sum agreed upon, they expressly mentioned that they paid this Jizyah on condition that 'the Muslims and their leader protect us from those who would oppress us, whether they be Muslims or others.' (Sir Thomas Arnold, Call To Islam, pp. 79-81)

The Arabs, to whom God has given power over the whole world, know how wealthy you are, for they live among you. In spite of this, they do not assail the Christian creed. To the contrary, they have sympathy with our religion, and venerate our priests and saints of our Lord, and they graciously donate to our churches and monasteries.' (Sir Thomas Arnold, Invitation To Islam)


The historian Adam Mitz is of the view that because of Islamic tolerance toward non-Muslims and by virtue of the protection granted to them, they paid the Jizyah in accordance with their financial capacities. This Jizyah was like the present-day national defense tax. Only persons who could perform military service were obliged to pay it. So Monks and ascetics were exempted, except for those who could afford to pay. (Islamic Civilization, Volume 1, p. 96)